Question

A summarised comparative statement of financial position of Kangaroo Ltd is presented below.

	30-Jun-20	30-Jun-19
Cash	$80,000	$60,000
Accounts Receivable	$65,000	$90,000
Inventories	$58,000	$62,000
Prepayments	$10,000	$12,000
Land	$90,000	$90,000
Plant	$380,000	$300,000
Accumulated Depreciation	($70,000)	($57,000)
	$621,000	$557,000
Accounts Payable	$45,000	$52,000
Long-term Borrowings	$170,000	$200,000
Share Capital	$280,000	$230,000
Retained Earnings	$126,000	$75,000
	$621,000	$557,000

Additional information

• There were no disposals of land or plant during the year.
• A $30 ,000 borrowing was settled through the issue of ordinary shares. There were no other repayments of borrowings.
• Profit for the year was $120 ,000, interest expense was $24,000, and income tax paid was $20,000. There were no items of other comprehensive income.
• A $49,000 dividend was paid during the year.
• Sales revenue for the year was $600 ,000. There was no other revenue.

Required

Prepare the operating activities section of the statement of cash flows using the indirect method of presentation for the year ended 30 June 2020.

Answer 1

An Extract of Cash Flow Statement of Kangaroo Ltd ended on June 20:

Particulars		Amount
Net Income for the Year		$120,000
Add: Accumulated Depreciation	$13000
Add: Decrease in Inventories	$4000
Add: Decrease in Prepayments	$2000
Add: Decrease in Account Receivables	$15000	$34000
Less: Decrease in Account Payable		($7000)
Operating Profit Before Interest and Tax		$147000
Less: Interest Expense	$24000
Less: Income Tax Paid	$20000	($44,000)
Net Cash Flow from Operating Activities		$103,000

Note:

1)Issue of ordinary shares, Retained Earning and Share Capital are parts of Financing activities will not be presented here

2)Change sin Fixed assets like plant and Land will come under Investing Activities.

3)Changes in cash will be shown in the final part of the Cash flow statement after getting the values of Operating, Investing, and Financing Activities